Lululemon’s Problem Might Just Be Sell-Through, Not See-Through

By

Suzanne Kapner

Mar 26, 2014 5:22 pm ET

Lululemon got a lot of attention for its see-through pants. But its problems may run deeper than overly sheer fabric.

Signal Data Corp., a newly established firm that maps stores against census data to analyze the quality of retail locations, thinks the fast growing seller of yoga gear may start to get bogged down as it opens new stores in areas that aren’t as profitable as its current locations.

The keys are population density and income. Signal says Lululemon, which reports earnings Thursday, opened new stores last year in areas with populations of about 1.3 million, down from 1.4 million people in the areas where it was opening stores two years earlier. Aggregate income for the new areas, a measure of raw spending power, was $38.7 million, down from $42.1 million for stores opened in 2011, Signal found.